IPv4 Address Markets

IPv4 Address Markets: The Anatomy of a Digital Resource Economy

Introduction: The Creation of an Unlikely Market

The IPv4 address market represents one of the internet’s most fascinating and consequential secondary economies—a multi-billion dollar global marketplace that emerged from what was originally designed as a free public resource. With the exhaustion of the original IPv4 address space (approximately 4.3 billion addresses), a sophisticated transfer ecosystem has developed, complete with brokers, valuation models, regulatory frameworks, and complex negotiations. This market sits at the intersection of technology policy, economics, and network operations, with implications for internet growth, equity, and evolution.

As Milton Mueller, internet governance scholar, observes: “The IPv4 market is a perfect case study in institutional innovation. The internet community created property rights and markets for addresses out of thin air, responding to scarcity with remarkable ingenuity.” This article provides a comprehensive examination of IPv4 address markets, their mechanics, participants, economics, and future trajectory.

1. Historical Context: From Abundance to Scarcity

1.1 The Era of Free Allocation (1981-2011)

Initial Distribution Philosophy:

  • “First come, first served” allocation by IANA to Regional Internet Registries (RIRs)

  • RIRs allocated to Local Internet Registries (LIRs) and end-users based on demonstrated need

  • No cost beyond administrative fees (typically $1,000-2,500 annually for RIR membership)

  • Justification: Addresses as public resource, not property

The Road to Exhaustion:

  • 1981: IPv4 specification (RFC 791) with 32-bit address space (~4.3 billion addresses)

  • 1990s: Internet commercialization accelerates consumption

  • 1994: First warnings about eventual exhaustion (RFC 1681)

  • 2011: IANA allocates final /8 blocks to RIRs (February 3, 2011)

1.2 The Tipping Points by Region

RIR Exhaustion Milestones:

  • APNIC (Asia-Pacific): April 19, 2011 – First RIR to reach last /8

  • RIPE NCC (Europe/Middle East): September 14, 2012

  • LACNIC (Latin America/Caribbean): June 10, 2014

  • ARIN (North America): September 24, 2015

  • AFRINIC (Africa): Still maintains addresses but under tight policies

Policy Responses to Scarcity:

  • Last /8 policies: Final allocations limited to small blocks (/22 or /24)

  • Needs-based justification requirements tightened

  • Transfer policies formalized within and between regions

2. Market Mechanics and Structure

2.1 The Two-Tier Market Structure

Primary Market (RIR Allocations):

  • Diminishing supply from RIR waiting lists

  • Strict needs-based justification requirements

  • Typically small allocations (/22 or /24 for IPv4)

  • Long wait times in some regions (years in APNIC, RIPE)

Secondary Market (Transfers):

  • Bulk of address transactions today

  • Three main transfer types:

    1. Inter-RIR transfers: Between organizations in different regions

    2. Intra-RIR transfers: Within same RIR region

    3. Merger/Acquisition transfers: Special category for corporate transactions

2.2 Market Participants and Roles

Sellers:

  • Legacy holders: Organizations with pre-RIR allocations (often universities, early tech companies)

  • Bankrupt/defunct companies: Addresses as remaining assets

  • Efficient networks: Companies that have transitioned to IPv6 or use NAT extensively

  • Speculators: Entities that acquired addresses anticipating price appreciation

Buyers:

  • Growing businesses: Especially cloud providers, hosting companies, ISPs

  • Enterprises expanding networks: Particularly with IoT deployments

  • Mobile operators: Supporting 4G/5G expansion

  • Content providers: Needing addresses for global anycast networks

Intermediaries:

  • Brokers: Facilitate transactions, often taking 10-20% commission

  • Legal firms: Specialize in transfer agreements and compliance

  • Escrow services: Hold funds until transfer completion

  • Valuation consultants: Assess address block value

2.3 Pricing Dynamics and Valuation Models

Current Price Range (2024):

  • /24 block (256 addresses): $10,000 – $15,000

  • /23 block (512 addresses): $19,000 – $28,000

  • /22 block (1,024 addresses): $35,000 – $50,000

  • /16 block (65,536 addresses): $1.8M – $2.5M

  • /8 block (16.7M addresses): Theoretical value ~$400M+ (rarely trades)

Factors Influencing Price:

  1. Block size: Larger blocks command premium (administrative efficiency)

  2. Cleanliness: Reputation score, blacklist status

  3. Regional factors: ARIN blocks typically most expensive

  4. Transfer history: “Clean” transfers without past abuse

  5. Age of block: Older blocks sometimes preferred (established reputation)

Valuation Methodologies:

  • Comparable sales: Recent transactions of similar blocks

  • Cost of alternatives: Price of equivalent cloud services over time

  • Income approach: Revenue generated from addresses (hosting, services)

  • Appraisal services: Professional valuation from specialized firms

3. Regional Market Variations and Policies

3.1 ARIN (North America) Market

Policy Framework:

  • Most liberal transfer policies

  • Both specified transfers (to specific buyer) and unspecified (to waiting list)

  • 12-month holding period for addresses from waiting list

  • Market characteristics: Most liquid, highest prices

Notable Transactions:

  • Microsoft’s 2011 purchase of 666,624 addresses from Nortel ($7.5M)

  • Ongoing large transactions among cloud providers

  • Active broker market with multiple established firms

3.2 RIPE NCC (Europe/Middle East) Market

Policy Framework:

  • Transfer must be justified by need (though less strict than initial allocation)

  • Buyer must be RIPE member

  • Market characteristics: Active, moderately priced, well-documented

Unique Aspects:

  • More diverse buyer base (including many Eastern European ISPs)

  • Greater proportion of small/medium transactions

  • Strong emphasis on documentation and compliance

3.3 APNIC (Asia-Pacific) Market

Policy Framework:

  • Strictest transfer policies

  • Must demonstrate need for 24-month period

  • Market characteristics: Limited supply, high demand, high prices when available

Special Challenges:

  • Long waiting lists for addresses from last /8

  • Significant demand from China, India, Southeast Asia

  • More transactions happening through mergers/acquisitions

3.4 Inter-RIR Transfer Markets

Policy Evolution:

  • Initially prohibited, then gradually allowed

  • Current policies vary by RIR combination

  • ARIN ↔ RIPE: Relatively straightforward

  • ARIN ↔ APNIC: More restrictive

Market Implications:

  • Arbitrage opportunities (though limited by policy)

  • Global price convergence over time

  • Complex legal/regulatory compliance

4. Transaction Process and Due Diligence

4.1 Standard Transaction Workflow

text
1. Listing → 2. Negotiation → 3. Due Diligence → 4. Agreement → 5. RIR Approval → 6. Transfer

Key Stages:

  1. Listing: Seller lists block with broker or directly

  2. Negotiation: Price, terms, conditions established

  3. Due Diligence: Buyer investigates block history, reputation

  4. Agreement: Contract signed, escrow funded

  5. RIR Approval: Formal transfer request submitted, approved

  6. Transfer: RIR database updated, payment released

4.2 Critical Due Diligence Elements

Reputation Analysis:

  • Blacklist checks: Spamhaus, UCEPROTECT, other DNSBLs

  • Historical abuse: Search of abuse.net, other databases

  • BGP routing history: RouteViews, RIS, BGPStream analysis

  • Geolocation accuracy: Current geolocation database entries

Legal Considerations:

  • Clear title: Verification seller actually owns addresses

  • Lien/search: Ensuring no claims against the addresses

  • Transfer restrictions: Legacy vs. provider-aggregated space

  • Tax implications: Vary by jurisdiction (capital gains, sales tax)

Technical Assessment:

  • Routing status: Currently announced? Where?

  • Fragmentation: Are addresses contiguous?

  • Previous users: Any residual DNS or network configurations

  • RIR compliance: Ensure seller in good standing

4.3 Contractual Elements

Standard Provisions:

  • Representations and warranties of ownership

  • Indemnification for pre-transfer abuse

  • Service level agreements for transfer coordination

  • Confidentiality clauses

  • Dispute resolution mechanisms

Special Considerations:

  • Warranty duration: Typically 30-90 days post-transfer

  • Escrow terms: Conditions for fund release

  • RIR approval contingency: What if RIR rejects transfer?

  • Post-transfer support: Assistance with routing configuration

5. Economic Analysis and Market Dynamics

5.1 Supply and Demand Drivers

Supply Factors:

  • Defunct companies: Bankruptcy proceedings releasing addresses

  • IPv6 transition: Organizations freeing IPv4 space

  • Merger synergies: Combined companies needing fewer addresses

  • Economic cycles: More supply during downturns

Demand Factors:

  • Internet growth: New users, devices, services

  • IoT expansion: Billions of new connected devices

  • Cloud migration: Centralization requiring large address blocks

  • Regulatory changes: Data localization laws requiring regional presence

5.2 Price History and Trends

Historical Price Evolution:

  • 2011: $8-12 per address (early market)

  • 2015: $12-18 per address (more RIRs exhausted)

  • 2018: $18-25 per address (cloud boom)

  • 2021: $25-35 per address (pandemic acceleration)

  • 2024: $35-50+ per address (current range)

Notable Price Events:

  • 2018 spike: Facebook’s large purchases, ARIN waiting list growth

  • 2020 COVID impact: Initial dip, then sustained increase

  • 2022-23 stabilization: Prices plateauing at higher level

5.3 Market Efficiency and Liquidity

Liquidity Variations:

  • Most liquid: /24 blocks (standard trading unit)

  • Less liquid: Very large blocks (/16 and above)

  • Illiquid: “Dirty” blocks with abuse history

Market Transparency Issues:

  • Private transactions not always disclosed

  • Price reporting lag

  • Regional information asymmetries

  • Broker dominance in price discovery

6. Legal and Regulatory Framework

6.1 Property Rights Status

The Great Debate:

  • RIR position: Addresses are “allocated,” not owned

  • Market reality: De facto property rights through transferability

  • Legal precedents: Mixed, with some courts recognizing property interest

Contractual vs. Property Rights:

  • Rights derived from RIR registration services agreement

  • Transferable but revocable under certain conditions

  • Key limitation: RIRs can revoke for policy violations

6.2 Regional Regulatory Variations

United States:

  • Minimal specific regulation

  • Treated as intangible property for tax purposes

  • Bankruptcy courts have treated as assets

European Union:

  • GDPR implications for WHOIS data

  • Competition law considerations for large acquisitions

  • VAT treatment varies by member state

Asia-Pacific Variations:

  • China: Strict controls, government approval often required

  • India: Specific regulations for address holding/transfer

  • Australia: Follows APNIC policies with additional reporting

6.3 Tax Considerations

Common Tax Treatments:

  • Capital gains: In many jurisdictions for sellers

  • Sales tax/VAT: Sometimes applicable

  • Depreciation: Some jurisdictions allow for amortization

  • Transfer taxes: Generally not applicable

Planning Considerations:

  • Entity structure optimization (holding companies)

  • Timing of recognition (installment sales possible)

  • Cross-border tax implications

  • Professional tax advice strongly recommended

7. Strategic Considerations for Participants

7.1 Buyer Strategies

Acquisition Approaches:

  • Direct purchase: From owner or via broker

  • Merger/acquisition: Acquire companies for their addresses

  • Leasing: Temporary access without ownership

  • Market timing: Strategic purchasing during downturns

Portfolio Management:

  • Diversification across blocks (age, reputation, size)

  • Geographic distribution for anycast networks

  • Mix of owned and leased addresses

  • Regular assessment of needs vs. holdings

7.2 Seller Strategies

Maximizing Value:

  • Reputation management: Maintaining clean blocks

  • Timing: Selling during demand spikes

  • Bundling: Combining with other assets in M&A

  • Auction vs. negotiated sale: Choosing right mechanism

Exit Considerations:

  • Tax implications of sale

  • Future needs assessment (IPv6 readiness)

  • Alternative monetization (leasing)

  • Partial sales vs. complete exit

7.3 Investor Strategies

Address as Asset Class:

  • Return characteristics: 15-25% annual appreciation historically

  • Correlation: Low correlation with traditional assets

  • Liquidity: Moderate (better than real estate, worse than stocks)

  • Risk factors: Regulatory change, IPv6 acceleration

Portfolio Construction:

  • Mix of block sizes

  • Geographic diversification

  • Blend of legacy and recent allocations

  • Consideration of use cases (different demand drivers)

8. Market Impacts and Externalities

8.1 Impact on Internet Growth and Innovation

Positive Effects:

  • Efficient allocation to highest-value uses

  • Funds innovation through address monetization

  • Supports startups through address leasing options

  • Encourages IPv6 adoption (address prices create incentive)

Negative Effects:

  • Barrier to entry for new networks

  • Concentration among large players

  • Potential hoarding/speculation

  • Administrative overhead for smaller organizations

8.2 Environmental Considerations

E-waste Implications:

  • Extended life for IPv4-only equipment

  • Delayed transition to IPv6-capable hardware

  • Energy consumption of additional NAT devices

  • Counterpoint: Avoiding premature equipment replacement

Carbon Footprint:

  • Transaction processes (legal, due diligence, travel)

  • Extended operation of legacy infrastructure

  • Network inefficiencies from extensive NAT use

8.3 Social Equity Concerns

Global Distribution Issues:

  • Developing regions priced out of market

  • Legacy advantages for early participants (mainly Global North)

  • AFRINIC policy: Attempt to maintain African addresses for African use

  • Potential solutions: Address sharing, philanthropy, subsidized transfers

Community Initiatives:

  • RIR community funds for address acquisition

  • Non-profit address pools

  • Educational institution support programs

  • Development-focused allocation policies

9. Alternative Models and Complementary Systems

9.1 Address Leasing Markets

Growing Segment:

  • Lower upfront cost for users

  • Steady income for owners

  • Typical terms: 1-5 years, renewable

  • Pricing: 15-25% of purchase price annually

Providers:

  • Specialist leasing companies

  • Large address holders offering lease options

  • Broker-mediated lease agreements

9.2 IPv4 Address Sharing Technologies

Carrier-Grade NAT (CGN):

  • Shares single address among many users

  • Widely deployed by mobile and some residential ISPs

  • Limitations: Breaks some applications, adds latency

Address Plus Port (A+P):

  • Allocates port ranges along with addresses

  • Better application compatibility than CGN

  • Limited real-world deployment

9.3 IPv6 as the Ultimate Solution

Adoption Trends:

  • ~45% of Google users access over IPv6

  • Most mobile networks IPv6-enabled

  • Variable adoption by content providers

  • Economic effect: IPv6 adoption dampens IPv4 demand growth

Dual-Stack Reality:

  • Most networks operate both protocols

  • IPv4 still required for legacy compatibility

  • Transition period measured in decades, not years

10. Future Outlook and Market Evolution

10.1 Short-Term Projections (1-3 years)

Expected Developments:

  • Continued price appreciation but slowing rate

  • Increased leasing market share

  • More sophisticated financial products (address-backed lending)

  • Enhanced regulatory scrutiny

Potential Disruptions:

  • Accelerated IPv6 adoption

  • Regulatory intervention

  • Large holder liquidation (government, corporate)

  • Technological breakthroughs in address sharing

10.2 Medium-Term Trajectory (3-7 years)

Market Maturation:

  • Price stabilization as IPv6 dominance grows

  • Standardized valuation methodologies

  • Increased institutional participation

  • Potential securitization of address portfolios

Policy Evolutions:

  • Clarification of property rights status

  • International harmonization of transfer policies

  • Address philanthropy becoming more established

  • Legacy address recovery programs

10.3 Long-Term Scenario (7+ years)

The IPv4 Sunset Scenario:

  • Marginal value declines as IPv6 reaches critical mass

  • Market transitions to niche applications

  • Last holders maintaining for legacy systems

  • Timeline: Likely 15-25+ years before significant decline

Alternative Scenarios:

  • Persistent dual-stack: IPv4 retains value indefinitely

  • Regulated utility: Government intervention creates regulated market

  • Technology breakthrough: New technology eliminates scarcity

11. Practical Guidance for Market Participants

11.1 For First-Time Buyers

Recommended Approach:

  1. Start with leasing to understand needs

  2. Purchase smallest block that meets requirements

  3. Work with reputable broker for first transaction

  4. Conduct thorough due diligence

  5. Have legal counsel review agreement

Common Pitfalls to Avoid:

  • Underestimating administrative overhead

  • Ignoring block reputation history

  • Not planning for future growth

  • Overlooking RIR policy compliance

11.2 For Sellers

Maximizing Value Strategies:

  • Clean up block reputation before listing

  • Bundle small blocks into larger units

  • Time sale with market cycles

  • Consider installment sales for tax benefits

  • Provide comprehensive documentation

11.3 For Investors

Risk Management:

  • Diversify across block sizes and regions

  • Maintain adequate liquidity for opportunities

  • Stay informed on policy developments

  • Have exit strategies for different scenarios

  • Consider environmental/social governance factors

Conclusion: A Market at a Crossroads

The IPv4 address market represents a remarkable case of institutional innovation—a functioning global market created entirely through community policy decisions rather than legislation. It has successfully allocated scarce resources to those who value them most, funded innovation through asset monetization, and provided a bridge to the IPv6 future. Yet it also raises fundamental questions about equity, access, and the nature of digital resources.

As Geoff Huston, Chief Scientist at APNIC, reflects: “The IPv4 market is a temporary fix to a permanent problem. It’s working remarkably well, but it’s ultimately a transition mechanism. The real solution remains the widespread adoption of IPv6.”

The market’s future will be shaped by several key dynamics:

  1. IPv6 adoption rate: The primary determinant of long-term IPv4 demand

  2. Regulatory developments: Potential interventions that could reshape the market

  3. Technological innovation: New approaches to address sharing or transition

  4. Global equity considerations: Pressure to address Global South needs

  5. Environmental factors: Sustainability concerns around extended IPv4 use

For now, the IPv4 market continues to function as a vital mechanism for internet growth, providing addresses where they’re needed most and creating economic signals that encourage efficient use. Whether it ultimately becomes a footnote in internet history or persists as a permanent feature of the digital landscape will depend on choices made by technologists, policymakers, and market participants in the coming years.

The IPv4 market teaches us that scarcity breeds innovation—not just technological innovation, but institutional and market innovation as well. Its evolution offers lessons for other digital resource governance challenges, from spectrum allocation to carbon credits to data rights. In this sense, the IPv4 market is more than just about addresses; it’s a laboratory for digital resource economics in the 21st century.

Appendices and Resources

Key Market Data Sources

  • IPv4.Global: Leading broker with price transparency

  • Hilco Streambank: Broker with bankruptcy specialization

  • Prefix Broker: European-focused brokerage

  • RIR Statistics: Transfer data from each RIR

  • Google IPv6 Statistics: Adoption rates affecting demand

Policy Documentation

  • ARIN Transfer Policy: Number Resource Policy Manual (NRPM) Section 8

  • RIPE NCC Transfer Policy: RIPE Policy Document

  • APNIC Transfer Policy: APNIC Policies

  • IANA IPv4 Recovered Address Space: Special policy for returned addresses

Educational Resources

  • APNIC Academy: Courses on addressing and transfers

  • ARIN Online: Transfer process guides

  • IPv4 Market Group: Industry association with best practices

  • IETF RFCs: Technical background (especially RFC 7020 on market dynamics)

Professional Services

  • Valuation firms: Address valuation specialists

  • Legal practices: Specializing in address transfers

  • Due diligence providers: Reputation and history analysis

  • Escrow services: Secure transaction facilitation

The IPv4 address market stands as testament to the internet community’s ability to evolve governance mechanisms in response to changing realities—a case study in pragmatic innovation that continues to shape global connectivity.